Software Pricing: Are We Doing It Wrong?

Yeah, it's a case of being easier to get a dollar from a million people than a million dollars from just a few.

Right to the point Starkers. Low margin high volume. Especially when the economy slows down.

, gaming industry should lower their prices to sell more games.

As a number of comments after the article pointed out, why give the game to early adopters for $25 when they are perfectly willing to pay $50, and you can always lower the price later?

I think Valve did it right - both with the original pricing, and the aggressive sales.

SD should sell Demigod for $10 some weekend, maybe coinciding with the release of additional content.

The early adopters cover the game development, some of the ongoing development and VC / investment capitol.  Adding new sales of units just adds to the profit margin with fairly fixed development costs.  I know a handful of people who picked up Demi at 20% and 50% off so hopefully Max turns out to be right!

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I disagree. Pricing is all over the map and isn't directly link to production costs. Still waiting to start saving on digital distribution, you know the part of the deal where publishing costs are cut (no box, no disc, no manual, nothing physical) but it still costs the same. Also if you can get the same or close to the same amount of money but your product is in the hands of more people, you're expanding your fanbase for future titles.

Unfortunately the digital market isn't really so profitable as you'd think.  With Steam for example (as I understand it,) after Valve takes their cut, the developer/publisher aren't making much more than they did off retail.  It's one of those things I really haven't been able to figure out, but by and large you won't see pricing diverge from retail until over 50% of games are sold digitally.  Pissing off retailers right now would destroy most companies.

Is there anyway to even quantify the "destroy" most companies part. I at least for PC gaming, there doesn't seem to be anyone tracking digital to retail very well plus, let's not forget the B&M and e-tailers aren't the same either. As for not making more money,well it is not the consumer fault if there is a loss of effeciency due to bad contract terms, or extra services required (as if online verfication systems are a real service although having servers available is admittedly a replacement cost). The consumer is getting less for the same dollar amount (again less product and no shipping and handling costs) and that doesn't sit well with me.

Not directly, but there have been estimates.  I don't remember where I read them though, so I can't give them to you.  IIRC digital still only amounts to somewhere between 10 and 20% of gaming purchases.

It is a service.  You get the game, you never have to hunt for a patch or worry about what condition your CD will be in five years down the road, usually the only DRM involved is logging into the account.  They do the work and spend the moneys to make sure all this works right, that you get good download speeds, that the installer works properly, etc.  What does the retail store sell you?  A box with a cd and a manual.  They don't care in the slightest what happens after that.

So I'd say I get more for the same dollar amount.

Meh, hunt for a patch. Google pretty much does the hunting for you and that is if you are too lazy to just go to the publisher or developers website. Not a service I am interested in actually paying for. I have CDs that worked fine after 15-20 years, though I can't say the same for the companies that published them. Almoast all of them are belly up now so I guess if there was service attched to them, I'd be worse off without a CD than I am now. Having to have an account to play a game at all is pretty much the ultimate form of DRM (see previous sentence).

I don't know why you would be so elaborate with the digital distribution and so basic with the retail. Retail versions aren't just about what's in the box either. That product is shipped, stocked and displayed. Removing the box isn't just removing the box, it's also removing services attached to that box.

I can browse Amazon or walk into any local discount store and find a lot of the games sold on steam for half the price steam sells it. It's ridiculously expensive. Hell, most new releases aren't even sold at the suggested price at release at the e-tailer and B&M stores.

I can see you want to turn this into a digital distribution vs retail pricing. As in one has to be better than the other, and naturally, only one opinion can "win".  I really don't care either way, the pricing with software is messed up. You have games that cost millions to make and publish being sold for 40 USD and then you have a game that is little more than the rehash of some of these value/casual games being sold for 20. Thre is clearly no link to between production costs and actual price. Heck even in casual game markets you have World of Goo selling for 6.99 at BigFishGames and 19.99 on steam. You have Guild Wars being sold at Newegg for 9.99 and other places the expansion alone is 2-3 times that amount.  Now some of that is sales, some of it is not and all the while you have developers claiming they aren't getting enough money, publishers who advertise their DRM as a service and a justification not to be competitive and behind the scenes are these contracts about who gets what for each dollar.

The fact of the matter is it costs money to produce cds, make those boxes and make those manuals, ship them to the store and get shelf space. All those costs are essentially dissipated by digital distribution and the cost of the servers to allow those downloads to happen is even't close to publication costs and yet the consumers aren't seeing the savings, and if the developers aren't getting that extra money then yes, there is a problem with software pricing and how the dollars are divided on the way to deliver said products.

Digital Distribution has two paths it can head down.
The first path is where it was promised to go, that is providing great games at cheaper-than-retail prices which results in more games sold for both the Publisher and the Developer as well as allowing smaller companies to reach a much larger audience and thus promote competition which should - theoretically - increase the quality or diversity of gaming immensly. Digital Distribution could be the best thing to happen to gaming since the invention of the 3D Accelerator.

The second is where it's actually going. Providing games at retail prices, or in some cases actually higher, despite lower over head costs and exspenses. Differences in exchange rates aside, Digital Distribution is also used to charge more to different countries which often results in loss of sales in such areas. Instead of using the platform to sell more games, companies appear to be using the platform to make more money selling the same number of games; selling the game at the same price as retail outlets despite the user receiving no box or physical property keeps retailers happy, but pisses off customers and thus results in fewer sails. In turn, retail priced Digital Content also ensures that more money is made as you don't have to pay for the production of boxes, discs, manuals, etc. while still selling the game at the same price.

When I purchased Demigod I was given the option of paying more to receive a box and manual in the mail. Adding the difference in prices, minus postage of course, and buying the game without the additional box and manual was much cheaper than the retail release and so I went there - not to mention that I got the game a month before it was released in Australia. This is what Digital Distribution was supposed to be.
A change to digital distribution would, yes, result in retailers not selling as many PC games - however, considering the massive chains here in Australia make more money selling Console games and hardware than they do PC, and week after week we hear how the PC Platform is dying, this is the way the industry is headed naturally on it's own, Digital Distribution could actually help the PC Platform make a come back if used correctly.
When games like Call of Duty: Modern Warfare 2 are over-priced simply because the popularity of the original - as admited by the company that is developing the game - and other games are rigged with pathetically restricting DRM software or are released with half the game missing, which is then offered as DLC or in the forms of expansion packs, is it any wonder why it's headed this way when companies continue to abuse their customers release after release?

So you disagree with me, which we established months ago.  Fascinating.

No.  I don't want to talk about pricing.  Some games are cheaper digitally, some are cheaper retail, some are on sale digitally at different times, some are on sale retail at certain times, some prices are outdated at either.  That about sums it up.  Neither option is cheaper as a rule.

And what services come with a game in a box?  The ability to take it home and install it?  That's all you get.  Of course, there's publisher support, but that's true of every game purchased everywhere.  As to shipping, that's a negative, and once we can do away with that we'll get games when they're done instead of a month later after it's all distributed.

And lets talk about stock.  A lot of retailers don't carry PC games anymore.  Some of them have them in some cabinet somewhere so you can't even see what they've got.  The selection is often piss poor at the retailers that do carry it.  With digital, once its available, it doesn't go out of stock (with rare exceptions.)  Sure, that doesnt matter with new releases, but it definately matters if you're looking for an older one.

This argument could go on and on and on and on and on and on and on and probably will (with different people arguing) much like Intel vs AMD or ATI vs NVIDIA or any other retarded forum argument.  It's a subject with much depth and since we don't have the actual stats on things, pretty much everything we say is meritless.

In the end, all I wanted to say previously was that there are people who disagree with you.  You think you get less with digital, I think I get more with digital.  That's pretty much the beginning and the end of it.

Well said.

Terrible. Terrible comparison here. You are talking about two different products in this comparsion. Steam and Retail versions are essentially the same. If it has online multiplayer, and there are no inherent version issues, the game won't know the differences between playing a Steam purchased game and the retail. ATI and Nvidia actually have physical differences about their cards. Always fun to see some throw around the word retarded in an argument to "strengthen" their point.

Who's even making a point?  My only point was that I disagree with you.  Yes.  The argument is retarded.  Yes.  I'm an obnoxious ass.  Get over it.  I'm not even feeling terribly good right now.  Enjoy.

Sorry about that I was uhh...ahem having an interesting couple days  

Realized I prolly needed to chill a bit   Ah well life goes on and all that crap.

Everyone has bad days. No big.

It's entertaining, have some more interesting days.

In case of most game development studios, yes, they cover game development... sequel development, to be precise !

Yeah!  So they can continue existing!  That's usually what game devs want to do...otherwise they wouldn't be making games.

I like to call a spade a spade!!!  Early adopters are sucked in by the "must have" hype and pay big prices to cover excessive profiteering and fat salaries to gaming execs.  Yeah, let's talk about their overheads... posh mansions with tennis courts and swimming pools; flash cars with insurance premiums higher than the cost of the average auto; Armani suits and plush office suites/studios, when the same thing could be accomplished wearing Levis in a garage on any decent PC.

Even when some games have been on the market for a quite while they remain over-priced (for what they actually are) and are not value for money IMHO.   Personally, I wouldn'y pay more than $9.99 for a game and never have... so I guess there's no such thing as a "must have" game. 

Nope, what you have is popularity driven by hype... and fools easily parted from their money.

Yeah, I know... I'm a cynical old bastard.... but I've seen how the other half lives (a gaming dev and a couple of software devs/distibutors)...  and their extravagances are sickening.